Applied Digital (APLD) Stock: What Triggered the Sudden Selloff on Monday?

TLDR

• Applied Digital stock plunged more than 17% in a single trading session with no company-specific news driving the decline
• The selloff comes after a strong rally that pushed shares up 143.70% over the past 12 months
• Investors are reassessing valuations for AI infrastructure stocks and taking profits following recent gains
• The company has shifted focus from Bitcoin mining hosting to building AI data centers, raising investor concerns about debt and expansion speed
• Wall Street analysts maintain a bullish long-term outlook despite the sharp pullback

Applied Digital Corp (APLD) shares experienced a brutal trading session, dropping more than 17% as investors hit the brakes on AI infrastructure plays. The decline caught many traders off guard, especially since no company-specific news triggered the selloff.

Applied Digital Corporation, APLD

The stock closed down 12.35% at $24.42, far worse than the S&P 500’s modest 0.16% decline on the same day. Over the past year, Applied Digital had been on a tear, climbing 143.70% as investors piled into the AI data center story.

Applied Digital has transformed itself from a crypto mining host into an AI data center operator. The company now builds and runs high-performance computing facilities designed specifically for artificial intelligence workloads.

That pivot attracted momentum traders and AI enthusiasts alike. But the rapid expansion has come with baggage—the company is taking on debt to fuel its data center buildout, making some investors nervous about the pace of growth.

Technical Picture Shows Mixed Signals

The stock’s technical indicators paint a complicated picture. Shares are trading 9.3% below their 20-day simple moving average and 18.5% below the 50-day average, signaling short-term bearish pressure.

However, the stock remains 4.6% above its 100-day moving average, suggesting some underlying support. The Relative Strength Index sits at 48.07, which falls into neutral territory—neither overbought nor oversold.

The MACD indicator shows bullish momentum by trading above its signal line. This hints at potential for a short-term bounce, though traders remain cautious given the recent weakness.

Key resistance stands at $25.50. If shares can push through that level, it could signal a return to the uptrend.

Profit-Taking Hits Momentum Names

The pullback appears tied to broader profit-taking across AI infrastructure stocks. Investors have been trimming positions after riding these names higher for months.

Sector rotation and renewed caution around stretched valuations are contributing to the volatility. Applied Digital became a poster child for the AI data center boom, which made it vulnerable when sentiment shifted.

Concerns about how quickly the company is expanding its footprint and loading up on debt have also weighed on investor minds. Without fresh company news, the stock got swept up in the momentum unwind.

Despite the sharp drop, Wall Street analysts reportedly maintain a bullish long-term view on Applied Digital. They see the AI data center buildout as a multi-year opportunity that could drive substantial revenue growth.

The stock’s recent volatility reflects the risk that comes with high-growth transformation stories. Applied Digital’s shift from crypto to AI positioned it at the center of one of the market’s hottest themes, but that also means it feels the pain when sentiment cools.

Traders are now watching to see if the 100-day moving average holds as support or if further weakness lies ahead.

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